OIDAR Services is a commonly used acronym for ‘online information and database access or retrieval services’. The services that are being provided by service providers like Netflix, Youtube, amongst others are being consumed by more and more consumers YOY. Their subscriber base has grown by leaps and bounds owing to the affordable access to internet and phones. In order to include these services under the purview of GST, the term ‘OIDAR Services’ has been included that is a comprehensive term for all such services.
OIDAR Services – Meaning
OIDAR Services have been defined u/s 2(17) of the IGST Act, 2017 as services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as –
- Advertising on the internet;
- Providing cloud services;
- Provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
- Providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
- Online supplies of digital content (movies, television shows, music and the like);
- Digital data storage;
- Online gaming.
OIDAR Services – Indicative List
An indicative list of OIDAR services is as under:-
- Website supply, web-hosting, distance maintenance of programmes and equipment;
- Supply of software and updating thereof;
- Supply of images, text and information and making available of databases;
- Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting and entertainment broadcasts and events;
- Supply of distance teaching.
OIDAR Services – Taxability
Under GST, the lawmakers intend to tax all OIDAR services provided from within or outside India for business or for non-business purposes. This includes services provided by the government, charitable entities or any other entity.
If an online service provider does not have an office in India, they must appoint an agent to handle tax payments. Additionally, if a non-taxable online recipient receives online services from a non-taxable territory, the supplier in that territory must pay the pay according to Section 14 of the IGST Act, 2017 as discussed below.
OIDAR Services – Place of Supply – Section 13(12)
As per Section 13(12), the place of supply of online information and database access or retrieval services shall be the location of the recipient of services.
Recipient shall be deemed to be in India if any 2 non-contradictory conditions of these 7 conditions are fulfilled:-
- The location of address presented by the recipient of services through internet is in the taxable territory;
- The credit card or debit card or store value card or charge card or smart card or any other card by which the recipient settles payment has been issued in the taxable territory;
- The billing address of the recipient of services is in the taxable territory;
- The internet protocol address of the device used by the recipient of services is in the taxable territory;
- The bank of the recipient of services in which the account used for the payment is maintained is in the taxable territory;
- The country code of the subscriber identity module card used by the recipient of services is of taxable territory;
- The location of the fixed land line through which the service is received by the recipient is in the taxable territory.
OIDAR Services – Rate of GST
The IGST rate for the sale of digital services in India is 18%, which applies to both OIDAR service providers located in India and outside India.
There is an exception for the online sale of e-books. This service is classified under HSN code 9984 (Telecommunications, broadcasting and information supply services) of the GST Tariff and is subject to a reduced rate of 5%.
OIDAR Services – Special provision for payment of tax by supplier of OIDAR services – Section 14
- Applicability – This section is applicable in case of supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient.
- A non-taxable online recipient means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.
- In case of OIDAR services, the supplier of services liable to pay IGST. If an intermediary located outside India arranges or facilitates supply of such service to a non-taxable online recipient in India, the intermediary would be deemed to be the supplier of the said service, except when the intermediary satisfies the following conditions namely:-
- The invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;
- The intermediary involved in the supply does not authorize the charge to the customer or take part in its charge. This means that the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services;
- The intermediary involved in the supply does not authorize delivery; and
- The general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.
- Registration scheme in respect of OIDAR Services –
As per Section 14(3), the supplier of OIDAR Services referred shall, for payment of integrated tax, take a single registration under the Simplified Registration Scheme to be notified by the Government.
Any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay integrated tax on behalf of the supplier.
If such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
FAQs on OIDAR Services
Q1. Is GST registration mandatory for OIDAR?
A1. Yes, GST registration mandatory for OIDAR, irrespective of their place of establishment.
Q2. Who can become the authorized signatory for OIDAR?
A2. For anyone to become an authorized signatory in GST, they must have a valid PAN card. They have to be authorized by the OIDAR service provider to act on their behalf in all GST related matters, including registration, filing of returns and making payments.